Express press service
MUMBAI: In another shock to mutual fund investors, who have yet to fully recover from alleged improprieties by senior Franklin Templeton executives, Axis Mutual Fund on Friday suspended two fund managers for serious violations.
According to sources, the two fund managers – Viresh Joshi and Deepak Agarwal – made unwarranted gains through ‘front running’. The lingo means the trading of stocks or any other financial asset by a broker, who has inside knowledge of a future transaction that could significantly affect the price. This is done by placing bids higher than the current market price for a stock and a lower ask (sell order) with a broker. The broker then forwards the difference to the off-book managers, either in cash or in kind.
Mutual fund insiders say the flamboyant lifestyle of one of the fund managers, who drives a limited-edition Lamborghini and owns several homes in Mumbai, caught the attention of the fund house, which has began to investigate the matter.
Axis MF, India’s seventh-largest mutual fund by assets, said it has been conducting a suo motu investigation since February 2022. “AMC has engaged reputable external advisers to facilitate the investigation. As part of the process, two fund managers have been suspended pending an investigation into possible irregularities,” its statement read. He, however, dismissed rumors that his Managing Director and CEO Chandresh Nigam was also involved in the irregularities.
Market regulator Sebi is also believed to be investigating the matter, but this could not be immediately confirmed.
According to a May 4 notice from Axis Mutual Fund, Joshi and Agarwal were terminated as fund managers of four ETF programs (Axis Consumption, Axis Banking, Axis Nifty and Axis Technology) and three funds (Axis Arbitrage Fund, Axis Quant Fund and Axis Value Fund).